US Extends Lukoil Sanctions Waiver as New Bidders Emerge
(Bloomberg) -- The Trump administration extended a sanctions waiver for some Lukoil PJSC transactions as it steps up engagement with foreign governments and potential buyers over the Russian oil firm’s international assets.
The US Treasury Department issued a license for certain transactions involving the company’s retail service stations and contracts for the sale of the firm’s international assets until Dec. 13, while a separate waiver for deals pertaining to Lukoil’s entities in Bulgaria was extended through April 29, the agency said in a statement.
The moves come as Treasury holds talks with allies from Central Europe to the Middle East while navigating the complex unwind of the company’s overseas operations ahead of what was originally a Nov. 21 deadline, according to people familiar with the matter, who requested anonymity as the matter is private. US officials wanted to allow more time for transactions to close and to explore alternate ownership structures, which could keep assets operating under non-Russian control, the people said.
“Until Dec. 13 isn’t a whole lot of time,” said Jeremy Paner, a former official at Treasury’s Office of Foreign Assets Control who’s a partner at Hughes Hubbard & Reed in Washington. “OFAC is thinking that they’re authorizing potential acquirers to keep their place in line, but the actual closing of the deal will take a lot longer than 30 days, even if it’s a fire sale.”
Interest in Lukoil’s portfolio has grown in recent days, with prospective buyers from the US, Europe and the Persian Gulf reaching out to the Treasury for approval to engage with the firm, the people said. One outcome under consideration involves a lead buyer taking over most of the international assets alongside several smaller piecemeal deals.
The company first announced plans to sell its international operations after getting sanctioned last month and had entered into talks with top commodity trader Gunvor Group. However, the deal collapsed after the US Treasury described Gunvor as the Kremlin’s “puppet.” Lukoil said earlier on Friday it’s in talks with other bidders and is seeking to avoid disruption to supplies.
As Russia’s most internationally diversified oil company, Lukoil has stakes in oil refineries in Europe as well as significant holdings in oil fields from Iraq to Kazakhstan. Its brand also extends to filling stations from the US to Belgium and Romania.
The deliberations over the firm’s international assets follow a recent ramp-up in Russian sanctions by the US as the Trump administration balances its desire to maintain lower oil prices with its goal of pressuring President Vladimir Putin to agree to a Ukraine peace deal. Washington had refrained from joining EU and UK sanctions packages in the initial months of President Donald Trump’s second term as his advisers attempted to engage directly with Moscow on a pathway to ending the war.
Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, said the latest Treasury license effectively separates the assets of Lukoil and Rosneft Oil Co. PJSC when it comes to potential buyers. Previously the two firms had been lumped together in Treasury materials. Rosneft is controlled by the Russian government, while Ziemba said Lukoil is “quasi-private.”
The Treasury’s move is about the US government “putting pressure on Russia to bring them to the negotiating table, at which point we could still see major shifts in the sanctions posture,” she said.
(Updates with details beginning in third paragraph.)
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